Community

First cuts aren’t always the deepest: City mulls mid-year budget

by Cyndy Hardy

SEDONA, Dec. 12, 2008 – Sedona is weathering the economic storm better than many Arizona cities; but not without concern and not without tightening its belt. The Sedona City Council approved some reductions Tuesday that mainly affect unspent but budgeted expenditures.

For now, city employees and some outside organizations that receive city grants avoided the chopping block. That could change early next year if the economy doesn’t improve.

In the best worst-case scenario, the city expects to tap the city’s approximately $10 million rainy day fund by about $500,000; which is about five percent of the general fund reserves, according to Interim City Manager Alison Zelms.

The council showed little resistance to the possibility considering the long-term economic forecast.
“Having a reserve fund just to worship rather that to use is missing the point,” said Councilman Cliff Hamilton. “This is exactly what it’s there for.”

The current cuts affect the city’s general fund.

The City Council trimmed the general fund in October when it reduced the budget for the redevelopment plan by $300,000.

At Tuesday’s meeting, the council added cuts for departmental non-salary expenditures that will reduce expenditures without cutting city staff.

Most city departments historically spend between three and five percent below their annual budget. The council’s action increased that target to 10 percent below budget, including a 25-percent reduction in training and travel costs.

The council froze spending of about $300,000 remaining in the contingency fund; hiring for unfilled positions; and filling new positions approved in this year’s budget including an environmental inspector, a part-time IT position, and two part-time parking attendants.
Since tourism is down, the council deferred $16,500 for a visitor intercept study that may prove more useful in the long run when the economy rebounds.

The City Council rejected a recommendation to cut city grants already budgeted to arts and historic preservation organizations.

“I think the concern is that many of the arts organizations have already budgeted and are anticipating for this money to come in. To do it now seems a bit unfair,” said Mayor Rob Adams.
But the city may have to reduce its grants programs in the next fiscal year. The council advised them to plan accordingly.

Nonprofit organizations that operate under contract with the city were not affected by Tuesday’s action.

If further cuts are necessary, Ms. Zelms hopes the City Council will look at programs and services rather than cutting personnel.

“The goal is to not cut things that are critical and that can’t be replaced as the economy improves,” she said.

The next round of cuts could be deeper, and affect the city’s wastewater and capital funds. Some may come back to council in January.

Ms. Zelms suggested the council consider reducing the scope of the costly Chapel area sewer project.

“I don’t know that we should be extending a system and then not requiring people to utilize it when there are other people in the community who would probably like to have sewer extended to them,” Ms. Zelms said.

The savings might help offset a forthcoming issue with bio-solid disposal at the city’s wastewater plant that may cost about $2 million more than anticipated.
She recommended the council consider reallocating some Series 2007 bond funds to the city’s major pump station project.

City officials will revisit the budget situation again in February, after sales tax revenues are posted for the remainder of 2008.
Actual revenues are up from what the city projected in October, Vice Mayor John Bradshaw said Tuesday.

“I wouldn’t want you making your decision based on what might be an anomaly. I hope it’s not an anomaly, but I wouldn’t want you basing your decision on that,” Ms. Zelms said.
Some of the city’s revenue rebound was due to construction sales tax revenue from large projects like the Hwy. 179 Improvement Project.

The Sedona Oak Creek School District is about to start a large project; and an expansion project for L’Auberge de Sedona was approved earlier Tuesday night. That means significant revenue for the city, even if retail sales taxes are off.

Ms. Zelms did not include those numbers in her projections because they are not sustainable in the long-term picture. “We’re getting pretty close even if you include the construction money and if things get better. I’d rather adjust now to prepare,” she said.

Ms. Zelms is concerned that future revenue could be adversely affected by the national economic climate.

“If everyone’s feeling this now, then in 12 months they may actually be spending less than they are now,” she said.

Copyright 2008. Cyndy Hardy. This article may not be reproduced, reprinted or redistributed without prior written permission from the author. Contact the author at cyndyhardy@msn.com.